Europe’s largest bank, hsbc, was forced to apologize before the United States Senate June 17 after being accused of turning a blind eye to money laundering by drug cartels and terrorists. The bank’s head of compliance, David Bagley, resigned as the bank was accused of allowing clients with links to al Qaeda, Iran and North Korea to use the bank to transfer money around the world.

The committee said hsbc supplied funds to the Saudi Arabian Al Rajhi Bank—despite Al Rajhi’s position on a terrorism watch list and its founder’s links with al Qaeda. It worked with other banks in the Muslim world that the U.S. government linked to terrorist financing.

The committee said the bank processed hundreds of millions of dollars’ worth of suspicious transactions by Russian “used-car salesmen,” only stopping when regulators stepped in.

The bank also rated its activities in Mexico as low risk, despite the “overwhelming information” indicating otherwise. This meant it didn’t even monitor its Mexican wing for suspicious transactions. Employees at the bank also raised concerns that the bank was ignoring money laundering in Mexico.

It wasn’t just a case of the bank turning a blind eye to dodgy transactions. The committee said the bank helped officials in nations like Iran, North Korea, Zimbabwe and Syria get around U.S. sanctions. When money was transferred from these countries to the U.S., they lied about the country of origin. An audit by Deloitte llp found that the bank facilitated nearly $20 billion of transactions with Iran.

“While some hbus [hsbc’s American wing] officials in the United States claim not to have known they were processing undisclosed Iranian truncations, documents show key hbus officials were informed early on,” said Sen. Carl Levin.

The U.S. Justice Department has also investigated several other major banks for similar offenses. Dutch bank ing paid $619 million in fines last month after facing similar investigations. Citibank, Bank of America and Western Union have been investigated for laundering drug money. The committee said that hsbc was a “case study” of the rampant problems in the finance industry.

hsbc promised to mend its ways, but the committee said it doubted this would happen. The bank has been in trouble with regulators for money laundering twice before—in 2003 and 2007.

The Senate subcommittee also rebuked the regulator, the Office of the Comptroller of the Currency, for not doing enough to punish hsbc when its problems were discovered.

Reports that a London-based bank is full of corruption are becoming routine. Coming on the heels of Barclay’s libor scandal and JP Morgan’s huge losses in the London operations, it shows that corruption and immorality has percolated throughout Britain’s banking sector. Whether it’s helping terrorists evade sanctions, lying so that colleagues can avoid losses, or massaging the figures to help the bank avoid collapse, for too many in Britain’s banks, profit is the only guide for their actions.

This is bad for the banks, and it’s bad for Britain.

Financial services is one of the few vibrant parts of the economy that Britain has left. But trust in London’s banks is all but gone. These scandals threaten to destroy London as a center for global finance.
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